Published August 4th 2022

Daily Brief - Why are investors reloading on Tech stocks?

TLDR

Investors - particularly in retail - are reloading on Tech stocks. This might show a change in how Big Tech is perceived.

net purchases among retail investors
Source WSJ

Why are retail investors buying again into tech stocks?

For one, the sector was considerably oversold. Last June 16th both SPX and Nasdaq traded at their lows for the year. With some portions of the tech space in bear market since 2021, the sector offered a compelling entry point.

Secondly, a narrative emerged that the Fed might be slowing down its hiking pace, which made everyone more relaxed about the fact that we might - just - avoid a recession in the style of Volker.

But there’s more…

However, something else is happening in the perception of Big Tech. Big Tech might begin to look more and more like a safe bet.

Google, Apple, Microsoft and Amazon manage a considerable portion of our tech infrastructure. If you were to pull the plug out of Big Tech, society would come to a standstill.

Maybe 20 years ago Walmart was the safe choice if you were worried about a downturn. Or maybe you would turn to utilities or energy. Recession or not, we need to eat, rent and turn on the lightbulbs.

But now Big Tech has become so pervasive that some investors believe it might be the safe choice. Google & co are infrastructure plays that are here to stay.

Conclusion

As discussed several times in our asset allocation pieces, the role of Big Tech in your portfolio is shifting.

Big Tech could become the core of a new Nifty Fifty group of large caps that are well funded and poised to do well in a higher-rate environment.

Idea Spotlight: Comcast

Price level indicators for CMCSA:NASD dropped abruptly to 37.68 and historically, this led to a median increase in price of 18.77% over the following 1M. TOGGLE analyzed 14 similar occasions in the past to produce the median projection and this insight received 6 out of 8 stars in our quality assessment.

In the wake of negative broadband subscriber growth at Comcast Corp. last week, a Barclays analyst downgraded CMCSA to equal weight from overweight.

comcast price history

Daily Brief - Why are investors reloading on Tech stocks?

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